Hyperliquid Review: DEX, HyperEVM and Tokenomics

What is Hyperliquid?

Hyperliquid is a decentralized exchange built for perpetual futures, running on its custom Layer 1 blockchain, Hyperliquid L1. With sub-second finality and high throughput, it delivers the speed of a centralized exchange while preserving on-chain transparency.

The platform introduces two core innovations: Hyperliquid L1, delivering low-latency order execution, and HyperEVM, an EVM-compatible environment enabling integration with existing dApps and assets. By merging financial primitives like order books and oracles within a decentralized framework, Hyperliquid creates an ecosystem that rivals centralized platforms in speed and efficiency.

Completely self-funded and community-owned, Hyperliquid rejects venture capital influence. Its $HYPE token, distributed through fair airdrops, reflects the project's ethos of decentralization, positioning Hyperliquid as a leading force in on-chain finance.

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The Hyperliquid DEX and HLP Vault

At the heart of Hyperliquid’s ecosystem is its DEX, built for perpetual futures and spot trading across 150+ assets with up to 20x leverage. With gas-free, instant transactions and billions in daily trading volume, it delivers the speed and liquidity of Binance while maintaining the transparency only DeFi can provide.

Central to its design is the Hyperliquid Liquidity Provider (HLP) Vault. Users can deposit USDC and earn annualized yields exceeding 24%, fueled by trading fees and market-making profits.

By reinforcing liquidity and rewarding contributors, the HLP Vault helps anchor the DEX’s position as the leader in decentralized perpetuals trading with the deepest liquidity.

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HyperEVM Explained

HyperEVM enables compatibility with Ethereum’s ecosystem, integrating ERC-20 tokens, dApps, and Ethereum-native tools into Hyperliquid. Built on the HyperBFT consensus mechanism, it delivers high throughput, low latency, and robust security.

The System Contract allows developers to access real-time Hyperliquid L1 data, such as block heights, mark prices, and spot prices, directly within their applications. This capability enhances the precision and functionality of DeFi protocols by leveraging on-chain data efficiently.

HyperEVM also facilitates atomic swaps between Hyperliquid-native assets (HIP-1) and ERC-20 tokens, streamlining liquidity and enabling seamless interoperability across networks.

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Applications Building on HyperEVM

Several notable projects are leveraging Hyperliquid’s HyperEVM to create innovative DeFi applications and enhance the ecosystem’s liquidity and functionality:

• HyperLend: A lending protocol utilizing Hyperliquid's infrastructure to enable variable interest rates, cross-collateralized loans, and flash lending capabilities.
• Okto: A mobile trading app integrating Hyperliquid’s builder codes for perpetual futures trading, featuring instant notifications and advanced TradingView chart support.
• Felix Protocol: A DeFi borrowing and lending platform in development on HyperEVM that allows users to deposit HYPE and receive its native feUSD stablecoin.
• Thunderhead: The creator of $stHYPE, a staking hub focused on MEV-aware yield options designed to strengthen Hyperliquid’s staking ecosystem.

These projects highlight the expanding utility of HyperEVM, showcasing its capacity to support a wide array of DeFi solutions while driving growth and innovation within Hyperliquid’s ecosystem.

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Hyperliquid Trading Fees and Funding

Hyperliquid's fee structure is based on a rolling 14-day trading volume, encouraging high activity and liquidity provision. Sub-account activity is aggregated under the master account's volume, while vault trading volume is calculated separately. Here is how it is structured:

• Taker Fees: 0.035% for 14-day volumes up to $5 million, decreasing incrementally to 0.019% for volumes exceeding $2 billion.
• Maker Fees: 0.01% for 14-day volumes up to $5 million, dropping to 0% for accounts trading more than $25 million.
• Maker Rebates: Start at -0.001% for 14-day maker volumes above 0.5%, scaling to -0.003% for volumes exceeding 3%.

This dynamic tier system incentivizes consistent trading activity and promotes liquidity within the platform.

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Funding Rates

Hyperliquid ensures perpetual contract prices stay aligned with the spot market through an hourly funding mechanism based on an 8-hour rate. 

Funding is capped at 4% per hour to manage costs and is calculated using the weighted median of centralized exchange prices, ensuring precise and reliable pricing.

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HYPE Tokenomics

Hyperliquid’s $HYPE tokenomics are built to empower the community and ensure sustainable ecosystem growth. With a total supply of 1 billion tokens, $HYPE launched on November 29, 2024, reaching a fully diluted valuation of over $10 billion. Here is a breakdown of the allocation:

• Community Allocation: 70% of the total supply is dedicated to the community. This includes a carefully executed airdrop of 31% (310 million tokens) to 94,000 verified users, with fraudulent wallets actively excluded to protect the integrity of the distribution.
• HYPE Token Burn and Buyback: To increase scarcity, Hyperliquid reinvests trading fees into $HYPE token burns and buybacks. As of December 2024, 45,000 $HYPE tokens have been burned.
• Strategic Reserve: An Assistance Fund holding $124 million worth of $HYPE ensures liquidity for future buybacks and ecosystem support.

By tying token value to trading fees and aligning incentives with its community, $HYPE sets a new standard for decentralization and user-driven growth in DeFi.

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Hyperliquid Founder

Jeff Yan (@jeff.hl) is the founder of Hyperliquid. He built his expertise in high-frequency trading at Hudson River Trading, where he developed scalable financial systems. In 2018, he founded Chameleon Trading, a top crypto market-making firm.

The 2022 collapse of FTX highlighted the vulnerabilities of centralized exchanges. In response, Yan launched Hyperliquid, a platform combining the speed of centralized systems with onchain transparency, user autonomy, and a commitment to avoiding VC funding.

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Bottom Line

Hyperliquid has cemented its reputation as the "On-Chain Binance," setting new benchmarks for speed, transparency, and community-driven growth in DeFi

By combining centralized exchange efficiency with the trust of onchain systems, it has redefined what a DEX can achieve. 

With innovations like Hyperliquid L1 and HyperEVM, and a clear commitment to community-first principles, Hyperliquid is not just a trading platform, iit is the foundation of a new era of onchain finance.